Default Servicers Implement New Procedures for HUD Reimbursements

New procedures for Management and Marketing (M&M) contractors take effect Wednesday for real estate owned (REO) properties that the Department of Housing and Urban Development (HUD) owns.
The third generation of these procedures, called M&M III, comes as HUD centralizes its mortgagee compliance functions into a single point of contact, called the mortgagee compliance manager (MCM). HUD awarded the MCM contract to Oklahoma City-based Michaelson, Connor & Boul (MCB).
The REO properties are generally acquired by HUD after a borrower defaults on a Federal Housing Administration (FHA)-backed mortgage. Like other REO properties, these houses typically need the same renovation and sales services that traditional lender- or investor-owned REO do.
According to a conference call recently held by Safeguard Properties, MCB is responsible for pre-and-post conveyance activities including, but not limited to, review of overallowable requests, extension of time requests, review claims reviews, title package reviews and approvals, as well as ensuring properties are conveyed to HUD according to FHA standards.
Introduced in the summer of 2009, the new rules implement a Web-based system for tracking mortgagees that service FHA loans called P260. The online portal is used to file foreclosure conveyance claims for reimbursement and eliminates the need for mortgagees to submit paper requests for pre-and-post conveyance activities to HUD.
In addition to lenders, any field service vendors and foreclosure attorneys who work for mortgagees will use P260. The new process has separate functions for M&M III contractors and HUD personnel, and a portal for lenders, closing agents and M&M III subcontractors. In addition, there is a listing site for the general public and prospective home purchasers.
Since the new procedures were announced last year, lenders have been attending training sessions to get acclimated to the new requirements. According to HUD, the mortgagee remains fully responsible for proper servicing of the property and any action taken by the mortgagee’s appointed servicer or agent is considered the actions of the mortgagee. Because of this, the mortgagee’s accesses P260 as a “superuser,” and the individual working as the lender’s superuser is responsible for creating online accounts for lender employees as well as separate accounts for vendors and agents. Vendors and agents that work for multiple mortgagees are required to have individual P260 access accounts for each mortgagee that the vendor or servicer has a relationship with.
Write toAustin Kilgore.